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The Real Deal Los Angeles

CIM Group looking to dissolve its REIT business

CIM REIT holds 95 percent of the firm’s outstanding stock
By Natalie Hoberman | October 05, 2018 02:15PM

Shaul Kuba (Credit: iStock)

CIM Group is studying whether to dissolve the REIT side of its business as it explores a recapitalization of its stock, according to a Securities and Exchange Commission filing published Friday.

The Los Angeles-based firm, which trades on the NASDAQ as CMCT, announced “an intent to dissolve” CIM REIT, which holds 95 percent of the firm’s outstanding common stock. Any shares of CMCT stock held by the REIT would be distributed to the REIT’s 27 institutional partners, CIM said in a filing.

Simultaneously, the firm announced it is eyeing a potential recapitalization, which would involve changing its debt to equity structure. The move is intended to shrink the firm’s debt.

CIM is offering certain stockholders the option to exchange, or cash out, of their stock.

Should CIM follow through with the dissolution, CIM REIT would cease to exist and its creditors would be paid back, according to an attorney familiar with the process.

Dissolution generally requires board and shareholder approval, as well as paying any outstanding debts and liabilities, the attorney said.

CIM’s REIT business owns several properties in California, Washington D.C. and Texas. Its L.A.-based holdings include 9460 Wilshire in Beverly Hills, two properties in West L.A., and one in Koreatown.

CIM Group, led by Shaul Kuba, has projects in all parts of the city. The firm is currently working on reopening the Sunset Gordon Tower in Hollywood, a 299-unit residential tower that has been vacant since 2015. It also owns the 2 California Plaza in Downtown L.A., currently the subject of a lawsuit involving the building’s contractor.